Hong Kong stocks surge over 5pc as Chinese funds flood the market …
Mainland investors piled into the city’s stocks via the through train programme, with turnover hitting a record HK$21 billion. Photo: Dickson Lee
The Hong Kong stock market opened high on Thursday morning with a 5 per cent rise in the Hang Seng Index a day after it was swamped by a wave of mainland Chinese money that helped drive trading to a record HK$252.4 billion turnover on the way to a seven-year high for local shares.
The Hang Seng Index reached a high of 27,922.67 and retreated to 27,658.94 at 10am, a staggering rise of 1,422.08 points, or 5.42%.
Bargain hunting swept the market on Wednesday after the valuation gap between mainland-listed A shares and H shares – the Hong Kong-listed stocks of mainland companies – widened by 4.47 per cent while the local exchange was closed for Easter and Ching Ming.
Aside from the record turnover, yesterday saw the daily quota for Hong Kong-bound investments under the market tie-up between the city and Shanghai filled for the first time.
Mainland investors piled into the city’s stocks via the through train programme, with turnover hitting a record HK$21 billion for southbound trade. The previous high was last Thursday, at HK$4.8 billion, pointing to new-found interest in the scheme from mainland investors, who had previously barely used their allocated daily quota of 10.5 billion yuan (HK$13.3 billion). The southbound flow was also boosted by a regulatory approval last week for mainland fund houses to invest in Hong Kong stocks.
The Hang Seng Index surged 3.8 per cent to close at 26,236.86, the highest close since May 6, 2008. The H-share index jumped 5.8 per cent to 13,396.59, with the southbound quota running out at about 2pm.
The northbound trade under the scheme was the highest since the market link began in November, at 13.9 billion yuan.
China CNR Corp and CSR Corp led the rally yesterday, soaring 41.8 per cent and 44.5 per cent respectively, after the Chinese train makers received government approval for their proposed merger.
“While mainland shoppers appear to be losing some of their enthusiasm for shopping in Hong Kong, it is likely that retail investors on the mainland will soon be snapping up H-share bargains in large numbers,” said Steven Sun, head of China Equity Strategy at HSBC.
Analysts say valuations of Hong Kong equities remain slightly below the five-year average of 11 times price-to-earnings and expect more gains if Beijing continues to signal a loosening of monetary and fiscal policies to support the property market and cushion the economic slowdown.
Despite the Hang Seng Index’s stellar performance yesterday, the benchmark is well adrift of the record high of 31,638.22 hit on October 30, 2007.
“I don’t see any bubble. Even if it’s at a seven-year high, the Hong Kong market is still fairly cheap versus peers,” said Stephen Sheung, head of investment strategy at SHK Private, the private banking arm of Sun Hung Kai Financial.
The Hang Seng China AH Premium Index narrowed by 5.04 per cent to close at 128 yesterday, meaning that dual-listed companies’ Hong Kong shares are still 28 per cent cheaper, on average, than their mainland counterparts.
Another big gainer yesterday was Hong Kong Exchanges and Clearing, with the market operator jumping 12.25 per cent to HK$220. The Shenzhen-Hong Kong market connect would be announced in the first half of this year, Chow Chung-kong, chairman of HKEx, said yesterday.
This article appeared in the South China Morning Post print edition as Mainland wave sends stocks to seven-year high
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Hong Kong stocks surge over 5pc as Chinese funds flood the market …
